Rafael Nadal insisted he can still win the ATP Finals for the first time despite a damaging 7-6 (9/7), 7-6 (7/4) defeat against Austria's Dominic Thiem on Tuesday.
Thiem overpowered Nadal behind closed doors at London's O2 Arena to put a dent in the Spanish star's bid to finally lift the one major prize missing from his packed trophy cabinet.
Thiem became the first player to qualify for the semi-finals a few hours later when reigning champion Stefanos Tsitsipas beat Russian seventh seed Andrey Rublev 6-1, 4-6, 7-6 (8/6).
Tsitsipas saved a match point in the final set tie-break before the Greek sixth seed sealed his first win of the week.
Nadal had beaten Rublev in straight sets in his first match, but the 34-year-old was unable to cope with Thiem in a high-quality clash.
Now Nadal, who lost the 2010 and 2013 finals of the event, has to beat Tsitsipas in his last group match to keep alive his hopes of reaching the semi-finals of the prestigious season-ending tournament.
Despite his perilous position, Nadal took heart from the way he competed against the inspired Thiem.
He believes that will stand him in good stead in a showdown with Tsitsipas that decides the second semi-finalist from the group.
"He played I think an amazing match, and I played well too. So my feeling is not negative. I lost, but I had plenty of chances in the first and then I had break up in the second set, Nadal said.
"I'm happy with the way I played. I think my chances are bigger to have a very good result now than five days ago because the level of tennis, even if I lost today, for me is much higher."
Nadal, who last month equalled Roger Federer's record of 20 Grand Slams by winning the French Open, has won 86 titles but just one of those has come on an indoor hard court.
The world number two has qualified for the ATP Finals for 16 years in a row, but his record at the eight-man elite event pales in comparison with Federer and Novak Djokovic after six injury withdrawals.
Potentially facing another disappointment in the Finals, Nadal said he couldn't explain his problems at the event.
"I don't know. I think even if I never won here, I don't want to pretend to be arrogant at all, because I am not. But I really don't need to show even to myself or to no one that if I am playing my best tennis I think I can win in every surface and against any player," he said.
"I never won in the World Tour Finals. That's the real thing at the same time. So no problem about that. I know I have to play my best if I want to have chances.
"Today was a match that I played at very high level. I have a match against Tsitsipas in two days. Gonna be another tough one.
"I hope to be ready. I think playing like this I am confident that I can have my chances in the tournament."
World number three Thiem, who defeated Tsitsipas in his opening match, has won his first two matches in this year's tournament as he looks to go one better than last year's runner-up finish.
The 27-year-old has already enjoyed a year to remember, reaching two Grand Slam finals and winning one of the four majors for the first time when he defeated Alexander Zverev in the US Open final in September.
"It's definitely one of the better matches I've played so far in my career," Thiem said.
"I think that today I played a little bit higher level than at the US Open. It was maybe the best match from me since the restart of the tour and that makes me super happy."